Retail in the southern hemisphere used to have an entirely different set of rules and consumer preferences. Has globalization now carpeted over the equator in retail?
Are the northern and southern hemispheres more alike than ever before?
You’re making a mistake if you’re writing off the southern hemisphere (SH) as your counter-season retail cousins. There are big changes in key southern hemisphere markets, like South Africa and Australia, that all retailers should know about.
These markets are in boom, while much of the retail world is working overtime to break even. Take South Africa for example, where apparel, footwear and leather goods sales grew 8.6% YoY in September 2017, online shopping scored double-digit growth and GDP growth promises a sunny outlook on future economics.
But with those rosy results comes a threat to SH retailers.
Growing local and international competition
For so long, SH had it pretty sweet – thanks to geography and seasons, its niche market was largely unappealing to international retailers. In the last few years however, there has been continued growth of both local and international competition.
New overseas entrants to the SH market mean that local South African retailers have limited retail expansion opportunities. The major players there are now needing to seek out new African emerging markets as well as international markets through acquisitions and licence agreements.
Doubling down on southern hemisphere
Some South African-based brands are approaching Australia as an expansion market, attracted by its proximity, parallel seasons and similar consumer outlook. South Africa’s MRP has made gains on the Australian market, and Australia’s Cotton On has been long established on South African shores.
Even SH retailers who don’t want a slice of the international pie should be thinking more globally. But to do that, some internal processes need to shift.
How SH retailers used to work
SH retailers used to have a really fortuitous seasonal delay that meant they could watch their aspirational markets and act upon what they learned six months later.
With a trend lag expected in more remote locations, international buying trips were really fruitful – SH had 6-18 months to act on what they might have scouted overseas.
Now that social media has sped up trend turnover and the internet has provided consumers with global access to the fashion world, this practice no longer works.
Trends are global, and they move fast. No longer can a buyer in Sydney hop on a plane bound for LA to check out the freshest trends – there just isn’t time to act on it upon returning home.
When you look at bestselling products in the three few months, you can see how aligned consumer tastes are globally.
Consumers don’t care where the influencer they follow on Instagram is from. They want the same trends they see their equals wearing around the planet.
See the similarities in product again in the footwear category.
There’s pros and cons for SH retailers in this syncing of trends. SH consumers’ fast adoption of trends provides a great opportunity to spin frequent narratives around newness that will entice shoppers. But it also means international retailers are even more primed for speaking very directly to what was once your local shopper.
So yes, expect a whole heap of new players in your markets with physical locations or targeted digital presences. Your faithful relationship with your shopper down the street is no more.
That means you need to go one better. You need to own your product direction, its positioning and its price point.
More alike than different
The great thing is markets really aren’t all that different. If you look at mass market womenswear you can see how closely Australia, UK and South Africa are aligned on price.
South Africa comes out as a little more price sensitive. There is a larger focus on the under $20 price point specifically in dresses and footwear. That really supports deeper price analysis before the launch of new product.
Southern hemisphere opportunities
Sustainability – With expanding middle classes and developing infrastructure, sustainable fashion is a huge opportunity in the southern hemisphere which has been a leader in the health and wellness space.
Improved retail experience – While focused on gearing up their digital businesses, southern hemisphere retailers need to ensure they’re delivering on the experiential front on the ground. To create world class retail experience, SH retailers need to embrace technology and enhanced convenience for the customer.
Truly own resort – The SH climate means local brands and retailers are experts in the resort game. The increased affordability of air travel means increasing numbers of consumers are taking vacations throughout the year. That’s resulted in retailers across market segments beefing up their holiday/vacation edits. This is a customer that SH brands, particularly in luxury and premium can really own.
As Net-a-Porter buyer Lisa Aiken told Australia’s Ragtrader magazine “Resort is a really substantial part of our business. It is a category that is continually growing especially as designers are shaping their collections to have a more transseasonal edit. More and more it’s about those fashion moments that have an appeal across both the north and southern hemispheres.“
Ones to watch
Twenty Seven Names – Quirky prints and super useful shapes for young creative professionals.
Georgia Alice – 90s inspired women’s tailoring and shirting stocked at Net-a-Porter.
We Are Kindred – super feminine floral dresses perfect for the resort set. Stocked at Yoox.
Romance Was Born – Creative womenswear loved by musicians and performers, which draws deeply on the Australian art world. Stocked at Saks.
Prime Obsession – influential Instagram design duo with a clean, contemporary aesthetic. Relaunching later this year at an affordable $50-250.
Sindiso Khumalo – Sustainable designer with an emphasis on handmade textiles and bespoke prints.
There is so much promise in the southern hemisphere for local and international retailers. It’s going to take some smart strategic moves to truly capitalise from the shifts. We’re ready, are you?